M-U Drillers Signal 4Q Financial Losses Due to Lack of Hedging
We suppose you can file this story under the category of “damned if you do, and damned if you don’t.” We’re referring to hedging–the practice of locking in prices to sell gas you will produce in the future for a specific price now. Last year natural gas producers, including most (if not all) of Marcellus/Utica producers, were caught flat-footed when the price of natgas skyrocketed and their hedges were locked in for much lower prices. So as the hedges “rolled off,” many producers either elected not to hedge again, or hedged very little of their future production. And now prices have crashed again, meaning those producers are not protected and must sell most (if not all) of their production at very low market prices.
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A financial analyst writing on the Seeking Alpha investors’ website wrote a detailed post outlining his thesis on why the price of natural gas is likely at the bottom now and will only go higher. He says that since natural gas prices are at or below breakeven levels for drillers, they are reducing their drilling rate. A negative shift in weather, falling rig counts, and the potential boost from Freeport exports may push natural gas back into a shortage over the coming months.
This post is kind of “in the weeds” with respect to reducing methane emissions from drilling, pipelines, and transportation. But we ask that you stick with us. As we have covered for more than a year, there are three main certification standards now in use by Marcellus/Utica (and other shale play) producers that want to prove the gas they produce is responsible, with low methane emissions. The three are: (1) Project Canary’s TrustWell Certification, (2) Equitable Origin’s EO100, and (3) The MiQ Standard (see 
The Biden EPA plans to allow private citizens to police oil wells and pipelines for methane leaks. Most of the time, that means Big Green groups will do the “policing.” And here’s how it will work: A radicalized group like the Sierra Club or Earthworks or NRDC or some other odious bad actor will set up equipment near oil and gas well sites or pipeline operations to report suspected “super emitter” leaks of at least 100 kilograms per hour. Once reported (likely a false report), the company involved would be required to perform a root-cause analysis within five days and take corrective actions within 10 days. All based on an accusation by an anti-fossil fueler. Methane snitches.
MARCELLUS/UTICA REGION: Natural gas remains today’s energy solution; NATIONAL: Freeport activity, cold snap give boost to natural gas futures; INTERNATIONAL: Oil supplies a bigger issue than demand for 2024; Oil and gas industry earned $4 trillion last year, says IEA chief; European LNG at 18-month low on Freeport reopening.